For the Quarter Ending June 2021
Butanediol (BDO) market in North America encountered robust demand amidst critical supply shortage. Post freezing fallout in the Gulf of USA, prices of BDO kept tracing upward trajectory due to several operational hindrances and robust demand from downstream sectors like Tetrahydrofuran and Polybutylene Terephthalate. In addition, incidents of supply shortages were also witnessed due to disrupted transportation chains. A major BDO manufacturer, BASF was heard increasing the prices in North America, with effect from 1st April 2021. Therefore, a steep rise by around 30% in prices of Butanediol (BDO) was observed across North America region during Q2 2021.
Asian market experienced mixed sentiments of Butanediol (BDO) during Q2 2021, as the demand and supply activities varied country over country throughout the quarter. In China, BDO prices escalated till April due to critical supply shortage, as several plants underwent maintenance turnarounds in the country. After gaining tremendous value, Butanediol (BDO) prices declined by more than 30% in May and reached USD 3320/MT till mid- May in China. While in India, BDO prices declined effectively during May and settled at USD 2886/MT, due to the second wave of pandemic in the country, as the demand reduced to a level that compelled traders to sell their stocks at a cheaper rate.
Following the global market fundamentals, prices of Butanediol (BDO) rose effectively in Europe during Q2 2021. European BDO manufacturers witnessed firm enquiries from Asia, amid an extreme supply crunch. Major manufacturers like Ashland increased their BDO prices for Europe in the month of April, due to continuous rise in demand and limited availability. On the demand perspective, demand from downstream Polybutylene Terephthalate (PBT) manufacturers remained robust throughout the quarter.
For the Quarter Ending March 2021
North American region witnessed critical shortage of Butanediol (BDO) and its derivatives, thus faced extreme difficulties to fulfil the demand from downstream sectors. Extreme cold disrupted the total output of the US gulf and created a huge shortage of almost all the necessary chemicals across the region and globally, as several major producers announced force majeure on their plants under these conditions. Furthermore, the demand from downstream sectors to make PU, THF and GBL remained extremely high throughout the quarter. Meanwhile due to the widened demand and supply gap, BASF increased the prices of BDO and its derivatives prices by USD 337/MT in North America region.
Demand for Butanediol (BDO) from its downstream derivatives sector remained high, though the production activities were comparatively low. During Chinese lunar holidays, BDO production across the country either hit low levels or were completely shut. Hence after lunar year prices of BDO surged exceptionally and floated from USD 2500/MT to USD 3375/MT within two weeks during February. Meanwhile in India, demand from paints and coating was deemed high while the shortage in domestic supply pushed downstream manufacturers to import. Moreover, record breaking hike in freight prices marked further rise in BDO prices across the region making them double from their previous values.
During Q1 2021 global market witnessed an extreme shortage of Butanediol (BDO) and its derivative chemicals, and Europe did experience the same. Heavy shortage of BDO, high demand from downstream sectors and halted imports activities caused BDO prices to rise drastically. BASF announced an increment in BDO and its derivative prices by USD 960/MT during March in European region. Meanwhile in Germany, price of 99% BDO hovered around USD 2255/MT during March.
For the Quarter Ending September 2020
During Q3, BDO supply across Asia was stable after maintenance turnarounds ended in China. However, comparatively reduced run rates maintained the overall supply tightness. BDO prices witnessed an increment in September after persistent stability in July and August on the back of tight supply and robust demand. Cargoes in China were heard trading at around USD 1150/tonne in early August. Disruption in logistics in the Xinjiang region, which accounts for more than 40% of China’s total BDO capacity, continued to hamper supply from late July to August. The news of closure of BASF Idemitsu Co. Ltd.’s (BIC) facility at Chiba, Japan in Dec. 2020 further pressured the supply side. Producer’s margins took a big leap after the three major downstream sectors - polybutylene terephthalate (PBT), polytetramethylene ether glycol (PTMEG) and gamma-butyrolactone (GBL) showed volume growth. Q3 end with optimism that the demand is expected to continue improving in the fourth quarter, as restocking of end-products, particularly in Asia and Europe is likely to boost the consumption of BDO.
BDO players reported upside potential looking at the buoyant demand and sufficient supply in the region. Buyers agreed that since the product availability has reduced compared to Q2 levels, prices have reported a marginal uptick. Demand stayed way below the last year’s levels, pressuring the overall margins that have long stayed unfavorable due to mulling sluggishness over the automotive sector. Traders anticipate that BDO supply is likely to stay intact despite the news of Lycra’s Texas plant turning non-operational by the year end creating a buzz in the regional market. However, players sense that imports from Asia should be available to bridge any demand-supply gaps in the near-to-long term.
BDO supply remained tight in Q3 due to production outages heard at a leading producer’s facility during September backed by lesser imports from Asia. Market sources were pointing at the considerable increases in spot pricing due to the changing demand fundamentals. Demand started gaining momentum after August due to raised sentiments from the downstream polybutylene terephthalate (PBT) manufacturers who further reported greater enquiries by the automotive producers. Regional demand for PBT shot up in Q3 with a producer reporting 45% increase in demand in September on month-on-month basis. Resumption in downstream operations triggered active restocking during September resulting in greater need for BDO derivatives. Players, however maintained a cautious over the influence of demand fundamentals and prevailing supply constraints, thereby maintaining the price range around USD 2015/tonne in the final weeks of September.